Pops wrote:Obviously it's table stakes, the price can only rise as high as ability to pay allows for a given demand. I think it could go back up the limit, which is brent $120/unleaded +/-US$4 by time to go to Grandmas house for christmas.
It is all about what the various players in the market see in their crystal balls in the medium term. The floor and ceiling are set by costs at the bottom: somewhere around $75 and the ceiling, ability to pay, somewhere around $100. But in the short run it is about how the consumer reacts when they grab the nozzle.
Something that occurred to me while reading this post. How are consumers reacting to the lower fuel price in terms of their personal and/or family budgets? If you take your fuel price savings and spend it on other things you boost the economy in the eyes of the economists. If on the other hand you pay down some of your debt to give yourself breathing room most economists don't pay much attention because you are not providing a prompt stimulus by additional consuming. On the gripping hand if you pay down some debt in the January-July period because of the lower fuel price then you can tolerate higher prices for longer on the next upswing. A lot of us myself included buy our fuel with credit cards pay at the pump because that is the most convenient way of buying fuel. If we pay down some debt while prices are lower then when prices go back up we will have the credit available to keep buying fuel for a while without cutting other spending to do so.